TOKYO (Reuters) - Japan has awarded subsidies to 14 groups of domestic companies in its second and last round of recruitment for feasibility studies of emission-cutting measures abroad, part of its efforts to develop an alternative to the U.N.'s carbon offset market.

Twenty-six groups were selected in the first round. Japan plans to distribute 2.5 billion yen ($32 million) in subsidies between the 40 groups to test low carbon technology in 18 developing countries, the trade ministry said on Thursday.

Japan wants to encourage countries to use its often costly technology to achieve emission cuts, and hopes that bilateral agreements will give it some carbon offsets to help it to meet a pledge to cut its emissions by 25 percent from 1990 levels by 2020.

Given little prospect of a binding climate treaty to replace or extend the Kyoto Protocol before its first period ends in 2012, Japan and the EU are looking for ways to help developing countries to meet emission reduction goals.

The next climate conference is in Durban next month.

Japan, the world's fifth-largest greenhouse gas emitter, has said its carbon offset scheme would supplement a U.N. climate change framework, and hopes that the scheme will start in January 2013.

Japan has started bilateral negotiations on low-carbon technology projects and offset schemes with eight countries in Asia, such as Vietnam and India.

Studies in the first round were focused on Asia.

The second round included studies for geothermal projects in Africa's Great Rift Valley, studies on energy saving in the manufacturing sector in South Africa and on so-called carbon capture and storage in Indonesia.

The United Nation's carbon offset scheme, in which Japan is a major buyer, has been criticized for taking too long to process projects and for requiring projects to be non-profit.

($1 = 76.780 Japanese Yen)

(Reporting by Risa Maeda; Editing by Edwina Gibbs)




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